Putting your partnership property in good order
So, why should you formalise your real estate requirements?
Every day at BMA Law we see first-hand the issues caused where GP partnerships have not correctly formalised their real estate options and documentation. It is highly recommended that you formalise your partnership property documentation to:
- correctly mirror the way property assets are held within the partnership agreement;
- comply with formalities established under real estate legislation regarding (A) instruments / dispositions required to be in writing and (B) contracts for the sale of land to be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document; and
- to protect the partners (and non-partners) from disputes including civil actions for debt and fraud (by ensuring the title deeds correctly record the legal and beneficial owners and that the appropriate signatories to paperwork are required in the event of a change of circumstances); and
- to ensure your partnership lender will be satisfied to lend on partnership assets.
Partnership assets, by their nature, are held on trust for the partnership (the beneficially interested). This means they belong to the partnership and not directly to an individual partner. If a partnership does not document how partnership assets are held within Land Registry title paperwork, you may be left to rely on the provisions of the Partnership Act 1890 and/or on trust principles to prove a partner’s share in property, which can attract a heavy, timely and costly evidential burden to demonstrate.
Specialist commercial property advice for your partnership
We can advise you on the means in which your respective property interests (as documented in your partnership agreement) should be treated at the Land Registry and in property related paperwork:
i) By the partnership individuals (in equal or different shares by the existing individual partners and incoming partners);
ii) By outgoing / retiring partners (taking partnership assets outside the partnership);
iii) In relation to the grant of lease from either:
a) all owning property owners to the partnership (known as “a leaseback”) (if the freehold property is held by private individuals); or
b) from the NHS (Property Services)
iv) Additionally, ensuring your rent cost reimbursements are achievable and service charge mechanisms are not overly cumbersome on your practice.